UFOC

Sample UFOC

ITEM1 THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES

To simplify the language in this Offering Circular, "AFC," "we," "us," and "our" mean Abbott's Frozen Custard, Inc., the franchisor. "You" and "your" mean the person who buys the franchise. If you are a corporation, partnership or other entity, "you" and "your" include the franchisee's owners.

Abbott's Frozen Custard, Inc. is a New York corporation incorporated on March 3, 1964. AFC does not operate under any other name. Our principal business address is 4791 Lake Avenue, Rochester, New York 14612. AFC has no predecessors or affiliates.

Our agents for service of process are disclosed in Exhibit D.

We are offering a franchise to you for the operation of one or more Abbott's retail frozen custard (and related products) stands ("Abbott's Stores" or "Franchised Businesses") where the public may purchase frozen custard, frozen yogurt, sherbet, soft drinks and other desserts and food-related products as approved by us. The franchise includes the right to use our name, product line (including our Abbott's Frozen Custard Mix), and methods of marketing and operation. The services and products of Abbott's Frozen Custard stands are used primarily by the motoring public for desserts or refreshment stops.

Our business has been a family-operated business for over 75 years, and we have conducted business of a type to be operated by you for approximately 50 years in Rochester, New York. We have offered franchises for Abbott's Stores for approximately 39 years. We have not offered franchises in any other lines of business. We do not engage, and have never engaged, in any business activities or any other line of business other than as described in this offering circular.

. Description of Franchised Business

General We grant franchises to establish and operate a Franchised Business, as indicated in, and under, a franchise agreement (the "Franchise Agreement"). The Franchised Business is a retail stand which features and offers for sale to the public frozen custard, frozen yogurt, sherbet, and related products as we specify, under our Proprietary Marks, as defined below. In order to become a franchisee, you will be required to operate your Abbott's Store in accordance with our standards and specifications, and you will be required to sign a Franchise Agreement.

The Abbott's System. The Abbott's Store will operate according to a unique system developed and owned by us consisting of a unique method for the preparation, marketing, distribution and serving of ice cream products, including frozen custard, frozen yogurt, sherbet, and related products (the "System"). The distinguishing characteristics of the System include the names "Abbott's" and "Abbott's Frozen Custard"; specially designed color schemes, signs, emblems; confidential formulas and recipes used in the preparation of ice cream products; specialized menus; and standards and specifications for equipment, equipment layouts, products, operating procedures, marketing and management programs, all of which may be changed, improved, and further developed by us.

S532058.1

The Franchised Business will operate in accordance with our Confidential Operations Manual (the "Manual") to be provided to you. You will also be provided with the right to use certain trade names, service marks, trademarks, logos, emblems, and other indicia of origin, including the marks "Abbott's", "Abbott's Original Frozen Custard", "Abbott's Frozen Custard: Always the Best", "Abbott's Homemade", "Abbott's Frozen Custard", "Abbott's Frozen Custard" ribbon logo, and "Abbott's Frozen Custard" circle logo, and such other trade names, service marks, trademarks and trade dress as are now, or may subsequently be designated by us for use in connection with the System ("Proprietary Marks"").

Market, Competition. The general market for retail businesses featuring frozen confections is well-developed and competitive. The number of restaurants and stores offering frozen confection products has increased recently and is expected to continue to increase rapidly. The Franchised Business will be competing against other national and local businesses featuring frozen custard and other frozen confections, such as ice cream and frozen yogurt, as well as supermarkets, convenience stores and fast food restaurants which offer similar items and services to the general public. The Franchised Business may also compete against other AFC locations or points of distribution. The food service business is highly competitive in price, service, business location, and food quality, and is often affected by changes in consumer tastes, economic conditions, population and traffic patterns.

The retail sale of frozen custard and frozen confections is typically seasonal. Sales levels are highly sensitive to local weather conditions and temperature. Frozen custard retail stands located in enclosed malls may be less affected by these conditions, but may still experience seasonal trends. Frozen custard retail stands typically operate from March through December.

Industry-Specific Laws and Regulations. Your Franchised Business will be subject to various federal, state and local laws, and regulations affecting the frozen custard retail stand, including state and local licensing, zoning, land use, construction and environmental regulations and various health, sanitation, and safety standards affecting the frozen custard retail stand. The operation of your Franchised Business may require a license for preparing and serving food on-premises. Various state and local laws may require the testing of products sold at your Abbott's Store on a periodic basis, either in the Franchised Business or at an outside laboratory. Your Franchised Business will be subject to state and local employment laws, such as the Fair Labor Standards Act and various state laws governing such matters as minimum wages, overtime and working conditions. Your Franchised Business will also be subject to other laws or regulations that are not specific to the industry, but apply to businesses generally.

ITEM 2 BUSINESS EXPERIENCE

Listed below are our principal officers, directors and other executives who will have management responsibility in connection with the franchises offered by this offering circular. The principal occupation and business experience of each, including the names and locations of

S532058.1

prior employers, are indicated below. Unless otherwise indicated, the employer is AFC and the location of employment is Rochester, New York.

President: Gail L. Drew

Since January 1995, Ms. Drew has served as President of AFC.

Vice President and Chief Executive Officer: Robert J. Amico

Since January 1995, Mr. Amico has served as Vice President and Chief Executive Officer of AFC.

Sales Broker: Kris Simonich

Since April 2005, Mr. Simonich has served as a sales broker for AFC. In addition, since January 2001, he has served as a sales consultant for Upside Group in Plainfield, Illinois. He has also served since March 2003 as a sales consultant for Allied Media, Inc. in Naperville, Illinois. From May 1999 to November 2001, Mr. Simonich served as Director of Admissions at Alta Colleges, in Woodridge, Illinois.

Other than Mr. Kris Simonich, we do not have any subfranchisor or subfranchise brokers.

ITEM 3 LITIGATION

No person previously identified in Items 1 or 2 of this Offering Circular:

a. Has an administrative, criminal or civil action pending against that person alleging: a felony; a violation of a franchise, antitrust or securities law, fraud, embezzlement, fraudulent conversion, misappropriation of property; unfair or deceptive practices or comparable civil or misdemeanor allegations; in addition, there are no pending actions, other than routine litigation incidental to the business, which are significant in the context of the number of franchisees and the size, nature or financial condition of the franchise system or its business operations.

b. Has been convicted of a felony or pleaded nolo contendere to a felony charge or, within the ten-year period immediately preceding the application for registration, has been convicted of or pleaded nolo contendere to a misdemeanor charge or has been the subject of a civil action alleging: violation of a franchise, antifraud or securities law; fraud, embezzlement, fraudulent conversion or misappropriation of property, or unfair or deceptive practices or comparable allegations.

c. Is subject to a currently effective injunctive or restrictive order or decree relating to the franchise, or under a federal, State or Canadian franchise, securities, antitrust, trade regulation or trade practice law, resulting from a concluded or pending action or proceeding brought by a public agency; or is subject to any currently effective order of any national securities association or national securities exchange, as defined in the Securities and Exchange Act of 1934, suspending or expelling such person from membership in such association or

S532058.1

exchange; or is subject to a currently effective injunctive or restrictive order relating to any other business activity as a result of an action brought by a public agency or department, including, without limitation, actions affecting a license as a real estate broker or sales agent.

ITEM 4 BANKRUPTCY

AFC does not have any affiliates, predecessors, officers, or general partners that during the 10-year period immediately before the date of the Offering Circular: (a) filed as debtor (or had filed against it) a petition to start an action under the U.S. Bankruptcy Code; (b) obtained a discharge of its debts under the U.S. Bankruptcy Code; or (c) was a principal officer of a company or a general partner in a partnership that either filed as a debtor (or had filed against it) a petition to start an action under the U.S. Bankruptcy Code or that obtained a discharge of its debts under the U.S. Bankruptcy Code during or within 1 year after the officer or general partner of the franchisor held this position with the company or partnership.

ITEM 5 INITIAL FRANCHISE FEE

The initial franchise fee is $26,000 ("Franchise Fee"'). $7,500 of which is payable as a deposit upon the signing of the Addendum to the Franchise Agreement. The remainder is due within 5 days after your signing and delivery to us of a lease or other suitable arrangement for the franchise location. We will use $3,500 of the deposit to defray our expenses and time in connection with your application, but $4,000 of the deposit is refundable if you have not entered into a lease or binding purchase commitment within 180 days after the payment of the deposit. The Franchise Fee is used to operate and maintain the franchise system and is not otherwise refundable.

ITEM 6 OTHER FEES

The following table describes other recurring or isolated fees or payments that you must pay tous,~or which we impose or collect on behalf of a third party, in whole or in part. Unless otherwise indicated below, all of the fees listed below are non-refundable and are imposed by, payable to, and collected by us.

Name of Fee

Amount

Due Date

Royalty¹

$2.20 per gallon; however, we reserve the right to

charge the greater of $2.20 per gallon or a royalty

of 5.5% of Gross Sales (as defined)

Per Gallon Royalty due Biweekly on

the first business day of every 2

weeks;

5% of Gross Sales due monthly on the first business day of each month

S532058.1

Name of Fee	Amount	Due Date
Advertising	$.195 per gallon; however, we reserve the right to charge the greater of $.195 per gallon or 2% of Gross Sales of the Franchised Business f"Advertising Fee")	Bi-weekly
Transfer³	1/3 of then-current Franchise Fee	Before transfer is effective
Supplier Inspection and Testing⁴	$500 to $1,000	Actual cost; as incurred.
Late Payment Penalty⁵	.5% per week of unpaid balance	Date when payment becomes overdue
Insurance⁶	Cost of insurance and, if not obtained by you, our procurement expense	As required and as incurred.
Audit⁷	Cost of audit, which could range from $500 to $1,000, if Gross Sales understated by 2%	30 days after billing
Liquidated Damages⁸	$500 per day	See Note 8
Indemnification	Cost of liability	As incurred
Collection Costs and Attorneys' Fees¹⁰	Cost of collection and attorneys' fees	As incurred
Sales Taxes¹¹	Cost of sales, use or similar tax	As incurred
Construction¹''	Cost of round trip fares for inspection	As incurred
Additional Training¹³	$1,000-$5,000	As incurred 1
Computer software/hardware updates¹⁴	$2,000 - $5,000	As incurred
Renewing Renovation, Refurbishment, Modernization, and Replacement of Franchise Facilities¹⁵	$7,000-$10,000	As incurred

¹ You must pay to us a recurring, non-refundable royalty fee, as determined by us, of $2.20

per gallon of "frozen custard mix, frozen yogurt and sherbet, or sorbet purchased by you or used by you or your assignees in the operation of the Franchised Business ("Per Gallon Royalty"). We reserve the right to charge a royalty equal to the greater of (i) the Per Gallon Royalty or (ii) 5.5% of your total Gross Sales (as defined below) of all goods sold at the Franchised Business (and any other Abbott's Stores opened pursuant to the Franchise Agreement) during the term of the Franchise Agreement ("Gross Sales Royalty"). We will not change the method of calculating royalties without giving you at least six months' prior written notice. If we implement the Gross Sales Royalty, Gross Sales will be deemed to equal to all revenues received less sales taxes collected, and once a month thereafter, based on your actual Gross Sales, we will either issue a credit or an invoice to you representing the difference between the applicable Per Gallon Royalty and the applicable Gross Sales Royalty. Any amount due to you (a credit) or any

S532058.1

amount due to us (an invoice) will be credited or paid as applicable on the next date a royalty payment is due.

"Gross Sales" means all revenues generated by your Abbott's Store (and any other Abbott's Stores opened under the Franchise Agreement) conducted upon, from or with respect to the Abbott's Store, whether such sales are evidenced by cash, check, credit, charge, account, barter or exchange. Gross Sales includes monies or credit received from the sale of food and merchandise, from tangible property, promotional or otherwise, and for services performed from or at the Abbott's Stores, excluding the sale of food or merchandise for which refunds have been made in good faith to customers, the sale of equipment used in the operation of the Franchised Business; sales, use or excise tax imposed by a governmental authority directly on sales and collected from customers; however, the amount for such tax is added to the selling price or absorbed, and is actually paid by you to such governmental authority.

After the first calendar year of the Franchise Agreement, we may, upon written notice effective on the first day of the calendar month after receipt of this notice, set a new higher royalty amount per gallon but this amount will not exceed the percentage increase in the all goods or general category of the Consumer Price Index for All Urban Consumers (CPI-U) published by the United States Bureau of Labor Statistics, or comparable index if the specified index is not available. The base index will be that of the beginning of the calendar year in which the Franchise Agreement is signed. The royalty per gallon as modified by escalation will be computed to two decimal places.

² The biweekly Advertising Fee will be based on $.195 per gallon of frozen custard mix, frozen yogurt, sherbet, or sorbet, as described in Note 1, above. However, we reserve the right to charge you an Advertising Fee equal to the greater of (i) $.195 per gallon of the items previously mentioned or (ii) 2% of your Gross Sales of the Franchised Business. In the years following the first calendar year (or portion thereof) of your operation, we may increase the 2% advertising fee to not more than 3% of your Gross Sales.

³ If you assign or transfer any interest of your franchise to a transferee who is not a member of your immediate family and not a corporation formed by you for convenience, you will be required to pay a non-refundable transfer fee to us equal to one-third of the then-prevailing Franchise Fee charged by us to new franchisees.

⁴ If you desire to purchase products from an unapproved supplier and our representatives inspect the supplier's facilities and samples from the supplier are delivered to us or to an independent testing facility we designate for testing, you must pay to us a charge not to exceed the reasonable cost of investigation and the actual cost of the test.

⁵ For default or delay in making payments to us under the Franchise Agreement, you must pay us a late charge will accrue in the amount of .5% per week or (the portion of a week) until paid.

⁶ Before you start construction of your Franchised Business, you must purchase and maintain at your sole expense at all times during the term of the Franchise Agreement the insurance coverage required by the Franchise Agreement, including workers' compensation

S532058.1

insurance, employer's liability insurance, comprehensive or commercial general liability insurance, and all risk property insurance. If you fail to obtain or maintain the insurance required, we will have the right and authority (but not the obligation) to obtain the required insurance and to charge you for it, which charges, together with a reasonable administrative fee for our expenses in so acting, will be payable by you immediately upon notice.

⁷ You must regularly submit to us certain information: weekly, monthly, and yearly sales reports and yearly financial statements and tax returns. We have the right to audit this information. Audits will be conducted at our expense. However, if we elect to have you pay royalties based on Gross Sales and any audit shows an understatement of 2% or more of Gross Sales Royalty, then you must immediately pay to us the royalty fee due for the amount understated upon demand, plus the additional late payment fee from the date such amount was due until paid. In addition, you must reimburse us for our costs of the audit including reasonable accounting and attorneys' fees.

⁸ If you violate the Franchise Agreement, after the 5th day that we provide written notice to you of the violation, you must pay to us $500 per day as liquidated damages, not as a penalty, for each day during which such violation continues, or such lesser amount as permitted under local law.

⁹ You must indemnify and hold harmless us and our successors and assigns from all claims, demands, losses, damages, liabilities, cost and expenses (including attorneys' fees and litigation expenses) resulting from, or alleged to have resulted from, or in connection with your operation of the Abbott's Store(s).

¹⁰ You must pay us all expenses, including attorneys' fees and court costs, incurred by us and our successors and assigns to remedy any defaults of or enforce any rights under the Franchise Agreement, effect termination of the Franchise Agreement or collect any amounts due under the Franchise Agreement.

¹¹ You must pay us an amount equal to any sales, use or similar tax (but not income taxes) imposed on us by the authorized taxing authority of any state or political subdivision with respect to any payment made by you to us for services or material furnished by us to you under the Franchise Agreement. The payments are nonrefundable and are collected by and payable to us. This reimbursement requirement will be applied uniformly to all franchisees.

¹² You must pay us the cost of any visits of ours to inspect the construction of the Franchised Business. This would include the cost of travel for up to 2 employees or consultants between our offices and the site of the Franchised Business and reasonable food, lodging, and car rental charges per visit.

¹³ We may make available to you or your employees such additional training programs as we, in our sole discretion, may choose to conduct. Attendance at these training programs may be mandatory. We reserve the right to charge you a fee to cover the cost of conducting such mandatory training programs. If we offer additional training programs, they will be held at our Rochester, New York store at 4791 Lake Avenue or at one of our franchisee store locations. Your costs depend on if you have to travel to Rochester and have to stay at a hotel, food

S532058.1

expenses, and rental car expenses. Additional training programs will generally be held for 5 days.

¹⁴ Costs of computer software and hardware upgrades and updates will be paid to vendors, not us. The range of costs depends on how many computers the Franchised Business has and how you maintain the computer software.

¹⁵ At your sole cost and expense, you must complete a full reimaging, renovation, refurbishment and modernization of the Franchised Business, within the time frame required by us, but no more often than once every 5 years, including the equipment, signs, interior and exterior decor items, fixtures, furnishings, trade dress, color scheme, presentation of trademarks and service marks, supplies and other products and materials, to meet our then-current standards, specifications and design criteria for Abbott's' businesses, including structural changes, remodeling and redecoration and such modifications to existing improvements as may be necessary to do so. These costs and expenses will be paid to vendors, not to us and will generally cover the cost of painting and new menu signs.

ITEM 7

INITIAL INVESTMENT

Except as otherwise described in the notes in this Item 7, the following chart provides an estimate of your initial investment for a new, single Abbott's Store and the costs necessary to begin operation of your Abbott's Store. All costs listed below are estimates only. Actual costs will vary for each franchisee and each location depending upon a number of factors. All fees and payments described in this Item 7 are non-refundable, unless otherwise stated or permitted by the payee.

	Amount	Method of Payment	When Due	To Whom Payment is to be Made
Initial Franchise Fee¹ ^r	$26,000	Lump sum	$7,500 deposit on signing of Franchise agreement, balance after signing lease	AFC
Equipment^	$70,500-$100,000	Lump sum	Before opening	AFC and Suppliers
Signs³	$3,000-$7,500	Lump sum	Before opening	AFC and Suppliers
Real Estate & Improvements⁴	(See Note 4)	(See Note 4)	(See Note 4)	Landlord
Opening Inventory	$4,000	Lump Sum	60 days before opening	Suppliers
Initial Advertising Fee⁶	$5,000	As arranged	Before opening; when franchise fee is paid	AFC
Training'	$1,000-$1,500	As arranged	As incurred	Suppliers
Utilities⁸	$2,000 -$5,000	As arranged	As incurred	Suppliers

S532058.1 8

	Amount	Method of Payment	When Due	To Whom Payment is to be Made
Office Supplies	$500	As arranged	As incurred	Suppliers
Computer Hardware and Software¹⁰	$7,800 -$10,000	As arranged	As incurred	Suppliers
Insurance Premiums''	$4,000 -$6,000	As arranged	As incurred	Suppliers
Additional Funds 3 mos.¹²	$25,000-$50,000	As arranged	As incurred	See Note 8
TOTAL	$148,800-$215,500

¹ See Item 5 for when this fee is partly refundable. We do not finance any fee.

² The estimate provided above includes custard machines, dipping cabinets, and freezers, all as set forth in Schedule A of the Franchise Agreement.

³ You must purchase the standard AFC signs from reputable vendors. With respect to the sign(s), you will pay for: (1) compliance with applicable laws and obtaining all permits and licenses; (2) real estate and other taxes; (3) installation, repairs and maintenance; and (4) insurance coverage. The cost of the signs will be approximately $3,000 - $7,500.

⁴ We require you to own or lease a location with at lease 900 square feet of space suitable for retail sale of franchise products. Typical locations are in a strip shopping center, in a mall, or near a highway. Three months' rent for a franchise is typically $8,400. A security deposit (usually equal to one month's rent) may be necessary if the building is leased, payable to the building owner. Other leasehold improvements (including wallpaper, paint, flooring, lighting, building code requirements) are estimated to be approximately $50,000, payable to independent contractors or suppliers.

Regardless of whether you own the premises for the Franchised Business or decide to lease or construct a new facility, you must hire our designated architect to adapt your Franchised Business to our standard plans and specifications and to local and state laws, rules, regulations, and ordinances. The fees for these design services typical cost between $5,000 - $10,000. You will be exclusively responsible for conforming the designs, plans, and specifications to all applicable laws-and regulations and for obtaining our approval of the final designs, plans and -specifications. Due to several factors, including your desire to purchase or lease, the local real estate market, the unique nature of. local regulations, and configuration of each franchise, we cannot estimate the total cost of constructing and equipping a franchise with any specificity. You should consult with your own construction consultants to estimate construction costs for any ¹ location at which you are considering opening a franchise.

You must pay us the cost of any visits of ours to inspect the construction of the Franchise. This would include the cost of travel for up to 2 employees or consultants between our offices and the site of the Franchise Business and reasonable food, lodging, and car rental charges per visit.

S532058.1

⁵ The required opening inventory from any Franchised Business will, of course, be determined by the volume of sales anticipated. The fees for opening inventory are nonrefundable and are collected by and are payable to us.

⁶ This figure may be matched by us. You must pay an Initial Advertising Fee of $5,000. We, in our sole discretion, may match your Initial Advertising Fee, if we determine that financial assistance is necessary to help establish your particular franchise. Any advertising fees collected from you will be placed in and administered by our policies governing the Advertising Fund (the "Fund"). See Item 11. These fees are non-refundable and are collected by and are payable to us prior to opening of a Franchised Business when the franchise fee is paid.

⁷ The training costs should range approximately between $1,000 and $1,500 for each person who attends the training program and will depend, in part, on the sites designated by us for training.

⁸ This figure includes estimated expenses for heating, lighting, air conditioning and other utility charges, which will vary depending upon local weather and building conditions, applicable rates, and other factors. Security deposits for utilities, including the amounts required and terms of repayment, will depend upon the local utility companies. Utility deposits may range between $2,000 and $5,000.

⁹ The estimate provided includes forms, paper, cash register, and tape.

¹⁰ See Item 11 for a description of the computer hardware and software.

¹¹ This estimate is the annual premiums for the insurance described in Note 7 to the Item 6 chart.

¹² This is an estimate only of the range of initial start-up expenses you may incur for approximately the first 3 months of operation and includes opening cash balances and a cash reserve; inventory replenishment; pre-opening advertising (in addition to the initial Advertising Fee); employee salaries and wages before opening; travel; food and lodging while attending training programs, Royalty Fees, utilities and other routine operating expenses. The amount of additional funds required as a cash reserve will depend upon the particular circumstances of each Franchise, including what expenses are prepaid by you (for example, insurance and operating expenses) and may vary significantly according to your identity and the site of the franchise. In addition, your access to credit will also affect the need or amount of any cash reserve funds. We do not require a specific reserve fund, but recommend a cash reserve fund of between $25,000 and $50,000 before beginning operations. Since expenses may vary both in amount and timing of payment, we urge prospective franchisees to consider and review any estimates of expenses, including timing and payment, with their financial and other advisors. The actual amount of additional funds you will need also depends on a variety of factors, including your own management skill, economic conditions, competition in your area, prevailing wage rates, local markets for our services.

The estimate of additional funds for 3 months is based on an owner-operated business. We estimate that, in general, you can expect to put additional cash into the business during at

S532058.1

least the first 3 to 9 months. We cannot estimate or promise when, or whether, any individual franchisee will achieve positive cash flow or profits.

ITEM 8 RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES

You must maintain, at all times during the term of the Franchise Agreement, at your expense, the premises of the Franchised Business and all fixtures, furnishings, signs, systems and equipment in conformity with our high standards and public image and to make such additions, alterations, repairs, and replacements as may be required by us.

You must purchase all custard-mixing equipment, requirements for the frozen custard mix and other ingredients (including yogurt, sherbet, cones, flavorings, syrups, and sundaes), and any other items sold as part of the end products that are offered for consumption to the retail consumer, as described in Schedule A to the Franchise Agreement (the "Products") only from us.

You must purchase all ingredients, products, materials, supplies, paper goods, and other items required for the operation of the Franchised Business, except the Products, solely from us or suppliers who demonstrate, to our continuing reasonable satisfaction, the ability to meet our reasonable standards and specifications for such items; who possess adequate quality controls and capacity to supply your needs promptly and reliably; and who have been approved in writing by us and such approval has not subsequently been revoked. If you desire to purchase any such items from an unapproved supplier, you must submit to us a written request for approval, or must request the supplier itself to seek approval. We must have the right to require, as a condition of our approval, that our representatives be permitted to inspect the supplier's facilities, and that samples from the supplier be delivered, at our option, either to us or to an independent laboratory designated by us for testing prior to granting approval. A charge not to exceed our reasonable cost of inspection and the actual cost of testing must be paid by the supplier or you. We reserve the right, at our option, to reinspect the facilities and products of any such approved supplier and to revoke our approval upon failure of such supplier. In addition to testing and inspections, we typically review the proposed supplier's financial records, business reputation, delivery performance, credit rating and other information. Our approval review usually is complete in 14 days. Applicable specifications, if and when they are available, will be furnished to you after you sign the Franchise Agreement.

You must record all sales on cash registers or other point-of-sale equipment approved, in writing, by us. We do not derive revenue from required purchases of specific cash registers and/or computer equipment and software.

If you purchase the above listed items from us, we will derive revenue from the required purchases. During fiscal year ending October 31, 2005, our total revenues from franchisee purchases of Products was $803,131 or 32.4% of our total revenues of $2,476,319.

We do not provide material benefits to you based on your use of designated or approved sources. We negotiate purchase arrangements with suppliers for the benefit of our franchisees.

S532058.1

ITEM 9 FRANCHISEE'S OBLIGATIONS

THIS TABLE LISTS YOUR PRINCIPAL OBLIGATIONS UNDER THE FRANCHISE AND OTHER AGREEMENTS. IT WILL HELP YOU FIND MORE DETAILED INFORMATION ABOUT YOUR OBLIGATIONS IN THESE AGREEMENTS AND IN OTHER ITEMS OF THIS OFFERING CIRCULAR.

Obligation	Section in Agreement	Item in Offering Circular
a. Site selection and acquisition/lease	Article I of Franchise Agreement	Items 6, 11
b. Pre-opening purchases/leases	Sections 10.03 and 10.04	Item 8
c. Site development and other pre-opening requirements	Article II of Franchise Agreement	Items 6, 7, 11
d. Initial and ongoing training	Article VIII of Franchise Agreement	Item 11
e. Opening	Article X of Franchise Agreement	Item 11
f. Fees	Article III of Franchise Agreement	Items 5, 6
g. Compliance with standards and policies/Operating Manual	Section 10.09 of Franchise Agreement	Item 11
h. Trademarks and proprietary information	Articles V and XII of Franchise Agreement	Items 13, 14
i. Restrictions on products/services offered	Section 10.02 of Franchise Agreement	Item 16
j. Warranty and customer service requirements	Not applicable	Item 11
k. Territorial development and sales quotas	Article II of Franchise Agreement	Item 12
1. Ongoing product/service purchases	Sections 10.03 and 10.04 of Franchise Agreement	Item 8
m. Maintenance, appearance and remodeling requirements	Section 10.01 of Franchise Agreement	Item 11
n. Insurance	Article XI of Franchise Agreement	Item 6
o. Advertising	Sections 8.03, 8.04, 10.05 and 10.06 of Franchise Agreement	Items 6, 11
p. Indemnification	Sections 15.04 and 18.03 of Franchise Agreement	Item 13
q. Owner's participation/ management/staffing	Section 10.13 of Franchise Agreement	Items 11, 15

S532058.1 12

Obligation	Section in Agreement	Item in Offering Circular
r. Records/reports	Article IV of Franchise Agreement	Item 6
s. Inspections/audits	Sections 5.09, 9.04, 10.02, and 10.04 of Franchise Agreement	Items 6, 11
t. Transfer	Article XIV of Franchise Agreement	Item 17
u. Renewal	Section 2.02 of Franchise Agreement	Item 17
v. Post-termination obligations	Sections 16.01 and 16.04 of Franchise Agreement	Item 17
w. Non-competition covenants	Sections 13.02 and 13.03 of Franchise Agreement	Item 17
x. Dispute resolution	Sections 24.02 of Franchise Agreement	Items 13, 14

ITEM 10 FINANCING _K

We do not offer direct or indirect financing. We do not guarantee your note, lease or other obligations.

ITEM 11 FRANCHISOR'S OBLIGATIONS

Except as described below, we are not obligated by the Franchise Agreement to provide any assistance to you.

Pre Opening Obligations

Except as described below, before the Franchised Business opens, we are required by the Franchise Agreement to provide the following to you:

1. We will provide training for you, your partner if you are a partnership or your principal shareholder if you are a corporation, and up to 2 of your personnel (Franchise Agreement, Section 8.01);

2. We will loan one copy of the Manual, if and when available, to you for the duration of the Franchise Agreement or make the Manual available to you electronically via diskette, CD Rom, electronic mail, the internet or other electronic format (Franchise Agreement, Section 9.02);

3. We will continue our efforts to maintain high and uniform standards of quality, cleanliness, appearance and service at all of our Abbott's Stores, to protect and enhance the

S532058.1 13

reputation of the System and the demand for the products and services of the System (Franchise Agreement, Section 9.04);

4. We will establish uniform criteria for approving suppliers; make every reasonable effort to disseminate our standards and specifications to your prospective suppliers upon your written request; however, we may elect not to make available to prospective suppliers the standards and specifications for such formulas or equipment designs deemed by us in our sole discretion to be confidential (Franchise Agreement, Section 9.04);

5. We will approve the architecture, layout, and initial appearance of the Franchised Business (Franchise Agreement, Section 9.06);

6. We will provide a list of approved items of required equipment and inventory (Franchise Agreement, Section 9.07); and

7. Upon your request and our discretion, we will conduct inspection visits of the construction of the Franchised Business. (Franchise Agreement, Section 9.08).

Continuing Obligations

After the Franchised Business opens, we are required by the Franchise Agreement to provide the following to you:

1. We will make available to you continuing advisory assistance in the operation of the Franchised Business, in person or by electronic or written bulletins made available as we may be deem appropriate (Franchise Agreement, Section 9.01);

2. We will continue our efforts to maintain high and uniform standards of quality, cleanliness, appearance, and service at all Abbott's stores to protect and enhance the reputation of the System and the demand for the products and services of the System (Franchise Agreement, Section 9.04); and

3. We will inspect the Franchised Business and its operations, as we deem appropriate (Franchise Agreement, Section 9.08).

Advertising Fees.

We will develop and conduct advertising and promotional programs that are regional and local in scope and that may be disseminated via print, radio, or television. Typically, we work directly with an advertising agent to place advertising. The cost of this advertising will be paid from Fund. We will apply amounts so received, together with an equal percentage amount from each Abbott's store owned by us, as we deem appropriate in our sole discretion, to the cost of advertising the product and your business and other franchisees who are also paying an advertising fee to us and whose franchise primary marketing areas are within the same standard metropolitan statistical area. (Franchise Agreement, Section 3.02).

S532058.1

Contributors to the Fund include us, franchisees, and AFC-owned franchises as well as some outside vendors and suppliers. We, in our sole discretion, may elect to waive or reduce the Advertising Fee for those franchisees that are located outside of the greater Rochester, New York metropolitan area, if the primary focus of the advertising will only benefit those franchisees within a particular region. We may charge these franchisees a reduced Advertising Fee based on the benefits they may receive from the advertising promotions chosen by us. The applicable reduction will be left to our sole discretion. (Franchise Agreement, Section 3.02). The funds collected for the Fund will be used to promote the products and services sold by you and us and are not used to sell additional franchises. Any remains in the Fund at the end of a fiscal year remain in the Fund and accrue from year to year. (Franchise Agreement, Section 8.03.).

In addition to managing the Fund, we will also: (a) review and approve, if acceptable, all of your marketing and promotional materials and programs, e.g., on-site, direct mail, newspaper, radio, and television advertising; we will provide you with notice of approval or disapproval within 10 days after our receipt of your proposed advertising; (b) require your participation in our promotional and special event programs, the cost of which will be paid for from the Fund; (c) reserve the right to receive payment for providing goods or services to the Fund; and (d) administer the Fund for the purpose of marketing and promoting Abbott's Frozen Custard, Inc. An unaudited annual statement of Fund administration for the most recent fiscal year will be provided to you upon written request. (Franchise Agreement, Section 8.04).

Advertising Council

The Advertising Council ("Council"^ consists of volunteer representatives from AFC franchisees, including AFC's owned stores. Members of the Council volunteer to participate in the Council. The Council serves in an advisory capacity and does not have any operational or decision-making power. All decision-making authority regarding advertising is retained by us. We, in our sole discretion, may change or dissolve the Council.

Advertising

All local advertising by you must be in such media, and of such type and format as we may approve; must be conducted in a dignified manner; and must conform to such standards and requirements as we may specify. You must not use any advertising or promotional plans or materials unless and until you have received written approval from us. (Franchise Agreement, Section 10.05). - - ■ -

All advertising and promotional plans proposed to be used by you, except such plans and materials that have" been previously approved by us must be submitted to us for our written approval (except with respect to prices to be charged) prior to any use. We must use our best efforts to complete our review of your proposed advertising and promotional plans within 15 days after we receive such plans. If written approval is not received by you from us within 15 days after receipt by us of such plans, we will be deemed to have disapproved such plans. (Franchise Agreement, Section 10.06).

S532058.1

Website

You must not promote, offer or sell any products or other services related to the Franchised Business through the internet or use the Proprietary Marks in any internet domain name, electronic mail address or home page address, or in the operation of any internet web site without our prior written consent. We will approve or disapprove of a web site within 5 days after we receive your request. We may establish such requirements as we deem appropriate, including, among others: (i) we may require you to submit to us for our prior written approval, a sample of any proposed internet web site for the Abbott's Store(s) ("Web Site"), domain name, home page address, format and visible (including proposed screen shots and any text, video clips, photographs, images, sound bites or other materials in which any third party has any ownership interest) and non-visible content (including meta-tags) in the form and manner that we may reasonably require; (ii) we may require you to establish hyperlinks to our web site and others as we may require, and to obtain our prior written approval of your use of any other hyperlinks and/or other links; (iii) we may require you to submit to us for our prior written approval any modifications to your Web Site. We may revoke our approval of your Web Site at any time and require you to discontinue your use of it. In addition to any other applicable requirements, you must comply with any standards and specifications we develop that are applicable to Web Sites as set forth in the Manual or otherwise in writing, which standards and specifications we may modify. We may designate the form and content of your Web Site and may require that any such Web Site be hosted by us or a third party whom we designate. We also may charge you a fee for developing, reviewing and approving your Web Site and/or hosting it. You must not use or permit any third party to use any of the Proprietary Marks in connection with any internet web site and/or as part of any internet domain name or electronic mail or home page address, unless such use is expressly approved by us in writing. (Franchise Agreement, Section 10.11).

Computer Equipment.

Under the Franchise Agreement, you must record all sales on cash registers or other point-of-sale equipment approved, in writing, by us. Within 30 days from receipt of written notice from us, you must purchase and install computer hardware and software equipment at the Abbott's Store(s) and/or at your principal business office, which computer hardware will include telecommunications devices, and which software may be a single program or set of programs, all of which must be obtained in accordance with our standards and specifications (the "Required Computer Equipment"). The Required Computer Equipment will permit 24 hour per day electronic communications between us and you, including access to the internet and our intranet. Currently, the basic computer point-of-sale system that we require you to purchase will cost approximately $7,800. Each additional work station costs another $2,200.

We have the right to upgrade or update computer hardware or software. In addition, we will have independent access to the information and data on sales recorded on cash registers or other point-of-sale equipment. There are no contractual limitations on our rights to access such information and data.

S532058.1

Table of Contents of Manual

We will allow you to view the Manual before purchasing the franchise.

Location Selection.

Under the Franchise Agreement, you must operate the Franchised Business only at a single location acceptable to us. You must submit a location approval application to us describing the proposed site. We will respond within 10 days, either accepting or rejecting (with reasons) the proposed location. You must submit to us satisfactory evidence that the Franchise Business is a permitted use under the zoning laws for the Premises (or a copy of an application to rezone or for a specific use permit). If we and you cannot agree on an acceptable location, we may terminate the Franchised Business.

We consider the following variables to be important in site selection: the population density, traffic patterns, points of interest, foot traffic, and proximity of the proposed site to other franchisees or potential competitors.

Opening of Business.

We estimate that the typical length of time between the signing of the Franchise Agreement or the first payment of any consideration for the Franchised Business and the opening of your business is approximately 16 weeks. Although 16 weeks is the typical length of time, it must be recognized that delays in the delivery of equipment or other items, such as the ability to obtain a lease, could extend this period.

Training.

We will provide an initial mandatory training program for you, your partner if you are a partnership, or your principal shareholder if you are a corporation, and up to two members of your initial staff. You will begin the basic training course immediately after you sign the Franchise Agreement. The program must be given at a location to be designated by us, and will be given during normal retail hours. The program normally lasts 5 consecutive business days, but will continue until we, in our sole discretion, deem the personnel qualified to operate the franchise operation. The instructors of the training program will have a minimum of 10 years experience in our operations and the subject taught. The training will consist of the proper operation of the franchise, serving of products, office administration and any other tasks pertinent to the successful operation of the franchise. The training will be given at no charge, but we reserve the right to impose reasonable charges and to be reimbursed for training materials in connection with the courses. You will be responsible for all your and your employees' costs for wages, employee benefits, travel, lodging and meals during the training program.

We may make available to you or your employees additional training programs as we, in our sole discretion, may choose to conduct. Attendance at these training programs may be mandatory. We reserve the right to charge you a fee to cover the cost of conducting such

S532058.1 17

mandatory training programs. All other expenses during the training period, including meals, lodging, wages and travel, will be borne by you. Optional training programs (instruction and required materials) may be offered to you for a fee. Any additional or optional training would cover subjects previously covered in our initial training program, would be given at a location to be designated by us, and would typically last for 1 or 2 days.

Subject	Time	Materials	Classroom	On-the-Job	Instructor
Franchise Operation and Sanitation (See Note 1)	25 hours	Manual	2 hours	23 hours	Joseph Orden or Eric LePore
Production of Product (See Note 2)	25 hours.	Manual	2 hours	23 hours	Joseph Orden or Eric LePore
Office Administration (See Note 3)	2 hours	Manual		2 hours	Joseph Orden or Eric LePore

Note 1.

This course will train your staff regarding customer relations, handling and inventory of supplies and the basic set-up, maintenance and operational skills needed to care for the franchise equipment. The proper methods for sanitation will also be covered in this course. Joseph Orden or Eric LePore of AFC will serve as the instructor. Both instructors have worked at Abbott's for over 10 years and have extensive experience in AFC franchise operations, including equipment operation, sanitation and customer relations. Manuals for this course will be provided when and if they become available.

Note 2.

This course will train your staff on the proper techniques for the production of each product sold by the Franchise. Manuals for this course will be provided when and if they become available. Joseph Orden or Eric LePore of AFC will serve as the instructor for this course.

Note 3.

This course will train your staff on the proper method of bookkeeping and recordkeeping. Joseph Orden or Eric LePore of AFC will serve as the instructor for this course.

ITEM 12 TERRITORY

We will grant to you a franchise to open and operate a Franchised Business at one location as designated in the Franchise Agreement ("Approved Location"). We will not

S532058.1

establish, nor franchise another to establish a franchised business under the Abbott's System, for the term of the Franchise Agreement, within the area described in Exhibit "A" of the Franchise Agreement (the "Territory"), without your prior written consent. We may, during the term of the Franchise Agreement, reduce or modify the Territory to encompass a geographic area immediately surrounding the Franchised Unit which must include a population (residential and/or daytime business or commercial) of no less than 10,000 people, which modification will become effective upon your receipt of written notice from us to you.

Depending on the demographics of the area, the minimum Territory or minimum exclusive Territory will consist of an area embraced by a zip code, county line, or other municipal boundary, with a population of at least 10,000 persons based on the most recent U.S. Census Bureau data or some other quantifiable criteria approved by us. The continuation of your Territory does not depend on achievement of a certain sales volume, market penetration or other contingency. You have no options, rights of first refusal or similar right to acquire additional franchises within the Territory or contingent territory.

The franchise granted to you under the Franchise Agreement is non-exclusive, and grants to you the rights to establish and operate the Franchised Business at only the specific location set forth in the Franchise Agreement. No exclusive, protected or other territorial rights in the contiguous area or market of such Franchised Business or otherwise is granted or to be inferred. We and our affiliates have the right to operate and grant as many other franchises for the operation of Abbott's businesses, anywhere in the world, as we, in our sole discretion, elect.

We retain the rights (a) to establish and operate, and license others to establish and operate a business similar to or the same as your Franchised Business under the same or different Proprietary Marks at any location outside of the Territory; (b) to sell or distribute, directly or indirectly, or license others to sell or distribute ice cream products and any other products or services, including, without limitation, sales made at supermarkets, convenience stores, grocery stores, machines, variety stores and the Internet, at any location (regardless of its proximity to your Franchised Business) under the same or different Proprietary Marks as we and our affiliates deem appropriate; and (c) to grant franchise rights within or outside of the Territory for other types of businesses that do not compete with the retail sale of frozen custard or ice cream products.

If you are unable to continue to occupy your Approved Location, you may relocate only with our prior written consent, which we may withhold in our sole discretion. You may not change your location(s) except in accordance with the requirements of Section 1.05 of the Franchise Agreement. If you are unable to continue to occupy your location, you may relocate only with our prior written consent, which we, in our sole discretion may withhold. The selection and construction of any new location will be subject to our requirements in effect at that time. If you move, you may not be able to have the same Territory, and the selection and construction of any new location will be subject to the requirements in effect at that time.

S532058.1

We may establish other franchises, company-owned outlets or other channels of distribution, selling or leasing similar products or services under a different trade name or trademark outside of the Territory.

ITEM 13 TRADEMARKS

Under the Franchise Agreement, we grant you the right and license to use the proprietary marks solely in connection with your Franchise. You may use only the marks "ABBOTT'S," "ABBOTT'S ORIGINAL FROZEN CUSTARD," "ABBOTT'S FROZEN CUSTARD: ALWAYS THE BEST," "ABBOTT'S HOMEMADE," "ABBOTT'S FROZEN CUSTARD", "ABBOTT'S FROZEN CUSTARD" Ribbon Logo, and "ABBOTT'S FROZEN CUSTARD" Circle Logo and other Proprietary Marks as we designate in writing for your use, and you may use them only in the manner we authorize and permit. You may not directly or indirectly contest our ownership of or rights in the Proprietary Marks.

We currently have the following pending applications on the principal register of the United States Patent and Trademark Office ("USPTO"):

Trademark	Application Number	Application Date
Abbott's Frozen Custard (Stylized)	78/700,401	August 25, 2005
Abbott's Frozen Custard Circle Logo	78/700,402	August 25, 2005
Abbott's Frozen Custard Ribbon Logo	78/700,404	August 24, 2005
Abbott's	78/700,396	August 25, 2005

We have a supplemental register federal registration for "ABBOTT'S" (registration date February 6, 2001; registration number 2,427,652). Because we do not have a principal register federal registration for "ABBOTT'S," "ABBOTT'S ORIGINAL FROZEN CUSTARD," "ABBOTT'S FROZEN CUSTARD: ALWAYS THE BEST," "ABBOTT'S HOMEMADE," "ABBOTT'S FROZEN CUSTARD", "ABBOTT'S FROZEN CUSTARD" Ribbon Logo, or "ABBOTT'S FROZEN CUSTARD" Circle Logo, we do not have the presumptive legal rights granted by registration ON THE PRINCIPAL REGISTER. All required affidavits pertaining to these registrations have been filed. As indicated in the chart above, we have filed a federal trademark application seeking registration of ABBOTT'S on the principal register of the USPTO.

There are no effective material determinations of the USPTO, the Trademark Trial and Appeals Board, the Trademark Administrator of any state, or any court relating to the Proprietary Marks. There is no pending infringement, opposition, cancellation, or material litigation involving the Proprietary Marks. There are no agreements currently in effect that significantly

S532058.1

limit our rights to use or license the use of the Proprietary Marks in a manner material to the Franchise.

You must promptly notify us of any suspected infringement of, or challenge to the validity of the ownership of, or our right to use, the Proprietary Marks licensed hereunder. We have the sole right to control any administrative proceeding or litigation involving the Proprietary Marks. In the event we undertake the defense or prosecution of any litigation relating to the Proprietary Marks, you must sign any and all documents and to do such acts and things as may, in the opinion of our counsel, be necessary to carry out such defense or prosecution.

We have the right to substitute different Proprietary Marks for use in identifying the System and the franchised businesses operating, and you must immediately substitute Proprietary Marks upon receipt of written notice from us.

We have no actual knowledge of either superior prior rights or infringing uses that could materially affect your use of the Proprietary Marks.

ITEM 14 PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION

Patents and Copyrights

We do not own any right in, or to, any patents or registered copyrights that are material to the franchise.

Confidential Manual

In order to protect the reputation and goodwill of us and the System and to maintain uniform standards of operation under our Proprietary Marks, you must conduct the Franchised Business in accordance with the Manual.

You must treat the Manual, and the information contained, as confidential, and must use all reasonable efforts to keep such information secret and confidential. You must not, at any -time, without our prior written consent, copy, duplicate, record, or otherwise make the Manual-available to any unauthorized person or entity. The Manual will at all times remain our sole property.

In order for you to benefit from new knowledge information, methods and technology adopted and used by us in the operation of the System, we may revise the Manual and you agree to adhere to and abide by all such revisions. You must at all times to keep your copy of the Manual current and up-to-date, and in the event of any dispute as to the contents of your Manual, the terms of the master copy of the Manual maintained by us at our home office, will be controlling.

S532058. i

Confidential Information

You must not, during the term of the Franchise Agreement or subsequently, communicate, divulge, or use for the benefit of any other person, persons, partnership, association, corporation or other entity, any confidential information, knowledge or know-how concerning the construction and methods of operation of the Franchised Business which may be communicated to you, or of which you may be apprised, by virtue of your operation under the terms of the Franchise Agreement. You must divulge such confidential information only to your employees as must have access to it in order to exercise the franchise rights granted and to establish and operate the Franchised Business under the Franchise Agreement and as you may be required by law, provided you must give us prior written notice of any such required disclosure immediately upon receipt of notice by you in order for us to have the opportunity to seek a protective order or take such other actions as we deem appropriate under the circumstances.

ITEM 15

OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION

OF THE FRANCHISE BUSINESS

We do not require you to participate in the actual operation of the Franchised Business, but most franchisees do so, and we encourage the practice. In addition, we will not grant a Franchised Business unless it is under the direct, on-premises supervision of a member of your immediate family. If you are a corporation, a person who owns at least 1/3 of the corporate equity must handle the direct, on-site supervision. Your on-site supervisor must have satisfactorily completed initial training to our satisfaction.

You must operate your Franchised Business for at least 10 consecutive months of each calendar year.

You must, at our request, require all of your supervisory employees, as a condition of their employment, to sign an agreement prohibiting them, during the term of their employment or subsequently, from communicating, divulging, or using for the benefit of any person, persons, partnership, association, corporation or other entity any confidential information, trade secrets, knowledge, or know-how concerning the System or methods of operation of the Franchised Business which may be acquired as a result of their employment with you or other franchisees. A duplicate original of each such agreement must be provided by you to us immediately upon signing.

ITEM 16 RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL

You must sell or offer for sale only such products and menu items that have been expressly approved for sale in writing by us, including frozen custard, frozen yogurt, sherbet, sorbet, cones, desserts, and soft drinks, refrain from selling any products and menu items that are not approved by us or for which we have withdrawn approval and meet our uniform standards of

S532058.1

quality and quantity and as have been prepared in accordance with our methods and techniques for product preparation; sell or offer for sale the minimum menu items specified in the Manual or otherwise in writing; refrain from any deviation from our standards and specifications for serving or selling the menu items, without our prior written consent; and discontinue selling or offering for sale such items as we may, in our discretion, disapprove in writing at any time.

We reserve the right to withdraw any of our previous approvals. In addition, we have the right to add additional authorized products that you must offer. There are no limits on our right to do so except that the investment required of a franchisee (for equipment, supplies and initial inventory) will not exceed $7,000 per year, adjusted for increases based on changes in the Consumer Price Index using January 1, 2005 as a base. Under the terms of the Franchise Agreement, you must comply with the new requirements.

ITEM 17 RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION

This table lists certain important provisions of the franchise and related agreements pertaining to renewal, termination, transfer and dispute resolution. You should read these provisions in the agreements attached to this Offering Circular.

Provision	Section in Franchise Agreement	Summary
a. Term of Franchise	Section 2.01	One 10-year term
b. Renewal or extension of the term	Section 2.02	If mutually agreeable, you may renew for another 10-year term
c. Requirements for you to renew or extend	Section 2.02	Give written notice not less than 6 months nor more than 12 months before the end of the initial term; sign our then-current standard form of franchise agreement; sign a general release; not be in default of any provision of Franchise Agreement, or any amendment; have paid or otherwise satisfied all monetary obligations owed by you to us; agree to reimage, renovate, refurbish, modernize, or replace the Franchised Business; and pay to us the then-current renewal fee in effect at date of renewal.
d. Termination by you	No provision	The Franchise Agreement does not contain such a provision.
e. Termination by us without cause	No provision	The Franchise Agreement does not contain such a provision.

S532058.1

Provision	Section in Franchise Agreement	Summary
f. Termination by us with cause	Section 15	We have the right to terminate the Franchise Agreement with cause. Depending upon the reason for termination, we may not provide you an opportunity to cure. See this Item 17(g) and (h) for further description.
g. "Cause" defined-defaults which can be cured	Section 15.03	You have 10 days to cure defaults for failure to pay royalties, financial obligations owed to us by you, and 30 days, prior to the effective date of termination for any other default, except those described in this Item 17(h)

S532058.1

Provision

Section in Franchise Agreement

Summary

h. "Cause" defined-defaults which cannot be cured

Sections 15.01 and 15.02

Your rights will automatically terminate without notice if you become insolvent, file for bankruptcy, or are subject to various legal actions or proceedings.

We may terminate the Franchise Agreement, without any opportunity to cure the default, effective immediately upon notice, if, for example: (1) you fail to complete construction of the Franchised Business and open for business within 180 days of signing of the Franchise Agreement; (2) you fail to operate the Franchised Business for the required 10 months per year without our consent; (3) you are convicted of or plead guilty to a felony; (4) a threat to public health or safety results from the operation of the Franchised Business; (5) you attempt to transfer your rights under the Franchise Agreement or in you or the Franchised Business without our consent; (6) you fail to comply with the covenants relating to non-disclosure and non-competition or fail to obtain signing of covenants from others, as required by the Franchise Agreement; (7) you disclose the contents of the Manual or other confidential information; (8) an approved transfer is not effected following your death or mental incapacity; (9) you submit false reports, receive a notice of default and do not initiate a cure immediately; (10) if after you cure any default, you commit the same default again; (11) you misuse the Proprietary Marks or damage the goodwill in the Proprietary Marks; (12) you refuse to let us inspect the premises of the Franchised Business, or your books, records or accounts; (13) you receive a notice of default and do not initiate a cure immediately; or (14) if after you cure any default, you commit the same default again.________________

S532058.1

Provision	Section in Franchise Agreement	Summary
i. Your obligations on termination/nonrenewal	Sections 13.03 and 16.01	2 year period of non-compete; cease operating the Franchised Business; return confidential information, signage and advertising materials; pay all sums owing to us; return the Manual.
j. Assignment of contract by us	Article XIV	We have the right to transfer or assign all or any part of our rights or obligations under the Franchise Agreement to any person or legal entity.
k. "Transfer" by you- definition	Section 14.01	You may not transfer an interest in the Franchise Agreement or you, or sell substantially all of the assets of the Franchised Business, without our prior written consent.
1. Our approval of transfer by franchisee	Section 14.02	We must approve all transfers; right to transfer is subject to our right of first refusal
m. Conditions for our approval of transfer	Section 14.03	We may impose any or all of the following conditions on our approval of your proposed transfer: you have satisfied your accrued monetary obligations and other obligations to us and our affiliates; you agree to remain obligated to covenants under the Franchise Agreement; transferee meets our then-current criteria for new franchisees; the transferee enter into a written assignment, assuming and agreeing to perform your obligations under the Franchise Agreement; transferee agrees to complete renovation within the time frame requested by us; transferee completes training program then in effect; you sign a written guaranty of transferee's obligations under the Franchise Agreement; and you pay to us a transfer fee of 1/3 of the then-prevailing franchise fee.
n. Our right of first refusal to acquire your business	Section 14.06	We can match any offer for your business or assume your obligations and pay you the book value for the franchise
o. Our option to purchase your business	Section 6.2	Upon your wish to assign your franchise, we may match any third party offer upon 60 days written notice

S532058.1

Provision	Section in Franchise Agreement	Summary
p. Your death or disability	Section 14.05	Upon your death or mental incapacity, your executor, administrator, or personal representative must transfer your interest in the Franchise Agreement, you, or the Franchised Business to a third party approved by us within 12 months after your death or mental incapacity. Such transfers will be subject to the same conditions as any other transfer.
q. Non-competition covenants during the term of the franchise	Section 13.02	You must not divert or attempt to divert any business or customer of the business franchised to any competitor; employ or seek to employ any person who is, at that time, employed by us or by any other AFC franchisee; or own, maintain, operate, engage in, or have any interest in any fast food store that specializes in the sale of ice cream products ("Ice Cream Store").
r. Non-competition covenants after the franchise is terminated or expires	Sections 13.03	You must not, for a continuous uninterrupted period of 2 years following the termination or expiration of the Franchise Agreement own, maintain, engage in, or have any interest in any Ice Cream Store located within 20 miles of the Approved Location; and must not, for 1 year following the termination or expiration of the Franchise Agreement, employ or seek to employ any person who is, at the time, employed by us or by any other Abbott's franchisee.
s. Modification of the agreement	Section 22.01	No amendment, change, or variance from the Franchise Agreement will be binding on either party unless mutually agreed to by the parties and signed in writing.
t. Integration/merger clause	Section 22.01	The Franchise Agreement, the attachments, and the documents referred to in the Franchise Agreement, constitute the entire, full, and complete agreement between you and us concerning the subject matter of the Franchise Agreement, and supersede all prior agreements.
u. Disputes resolution by arbitration or mediation	Not applicable	The Franchise Agreement does not contain such provision.

S532058.1

Provision	Section in Franchise Agreement	Summary
v. Choice of forum	Section 24.02	Judicial district in which we have our principal place of business.
w. Choice of law	Section 24.01	New York

These states have statutes that may supersede the Franchise Agreement in your relationship with us including the areas of termination and renewal of your Franchised Business:

Arkansas - Stat. Section 70-807; California - Bus. & Prof. Code Sections 20000-20043; Connecticut - Gen. Stat. Section 42-133e, et seq.; Delaware - Code, tit.; Hawaii - Rev. Stat. Section482E-1; Illinois - Rev. State Chapter YlYh par 1719-1720; Indiana- Stat. Section 23-2-2.7; Iowa - Code Sections 532H.1-523H.17; Michigan - Stat. Section 19.854(27); Minnesota -Stat. Section 80C.14; Mississippi - Code Section 75-24-51; Missouri - Stat. Section 407.400; Nebraska - Rev. Stat. Section 87-401; New Jersey - Stat. Section 56:10-1; South Dakota -Codified Laws Section 37-5A-51; Virginia - Code 13.1-557-574-13.1-564; Washington - Code Section 19.100.180; Wisconsin - Stat. Section 135.03. These and other states may have court decisions that may supersede the Franchise Agreement, including in the areas of termination and renewal of your Franchise.

ITEM 18 PUBLIC FIGURES

We do not use any public figure to promote our franchise.

ITEM 19 EARNINGS CLAIMS

We do not furnish or authorize our salespersons to furnish any oral or written information concerning the actual or potential sales, costs, income or profits of an AFC retail frozen custard stand. Actual results vary, from store to store and we cannot estimate the results of any particular franchise.

ITEM 20 LISTS OF OUTLETS

The following tables give the status of AFC's franchised stores and company-owned stores.

S532058.1

FRANCHISED STORES STATUS SUMMARY FOR FISCAL YEARS ENDING 2005/2004/2003'

STATE	TRANSFERS	CANCELED OR TERMINATED	NOT RENEWED	REACQUIRED BY AFC	LEFT THE SYSTEM OTHER	TOTAL FROM LEFT COLUMNS	FRANCHISES OPERATING AT YEAR END
Connecticut	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	1/1/0 J
(Florida	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	0/0/0	2/0/0
[New York	1/2/3	1/1/0	0/0/0	0/0/0	0/0/0	2/3/3	27/24/16
[totals	1/2/3	1/1/0	0/0/0	0/0/0	0/0/0	2/3/3	30/25/16

All numbers are as of October 31 for each year.

STATUS OF COMPANY OWNED STORES FOR YEARS 2005/2004/2003¹

State	Stores Closed During Year	Stores Opened During Year	Total Stores Operatinj At Year End
New York	0/0/0	0/1/0	5/5/4
TOTALS	0/0/0	0/1/0	5/5/4

(1) Note: All numbers are as of October 31 for each year.

PROJECTED OPENINGS FROM NOVEMBER 1, 2005 TO OCTOBER 31, 2006

STATE	FRANCHISE AGREEMENT SIGNED, BUT STORE NOT YET OPENED	PROJECTED NEW FRANCHISED BUSINESSES OPENING IN 2006	\| PROJECTED NEW COMPANY-OWNED BUSINESSES IN 2006
Connecticut	0	0	0
Florida	3	3	0
New York	0	1	0
TOTALS	3	4	0

Attached as Exhibit F are the names, addresses and telephone numbers of all franchisees as of October 31, 2005. Except for the franchisee indicated below, no franchisee has had an outlet terminated, cancelled, not renewed or otherwise voluntarily or involuntarily ceased to do business under the Franchise Agreement during the fiscal year 2005, or not communicated with AFC within 10 weeks of the application date of this Offering Circular.

Westgate Plaza	585-426-5540	Chris Martin
1589 Howard Rd		Jim Martin
Rochester, NY 14624		George DaGraca

S532058.1

Nick Centola

ITEM 21 FINANCIAL STATEMENTS

Attached as Exhibit A are AFC's audited financial statements for fiscal years ended October 31, 2005, October 31, 2004, and October 31, 2003, and unaudited balance sheet and statement of operations as of March 18, 2006.

ITEM 22 CONTRACTS

Attached are copies of the following contracts related to the offer of the Franchise:

Exhibit

B. AFC Franchise Agreement

C. AFC Equipment and Supply Agreement

ITEM 23 RECEIPT

A receipt in duplicate is attached to this offering circular as Exhibit G. You should sign both copies of the receipt. Keep one copy for your own records and return the other signed copy to Abbott's Frozen Custard, Inc., 4791 Lake Avenue, Rochester, New York 14612.

S532058.1